California workers’ compensation insurance

Every state has different requirements for workers’ compensation insurance. In California, workers’ compensation is mandatory for all employers, even if the company only has one employee.

California law requires a business owner to carry workers’ comp insurance for employees who regularly work in California, even if the business is headquartered in another state.

Specific types of contractors are required by state law to carry this policy, even if they don’t employ anyone else. This includes roofing, tree service, and HVAC contractors.

Sole proprietors and independent contractors should strongly consider buying workers' comp even when it's not required. While it may be tempting to pass on purchasing a policy if you are legally exempt, should you get injured on the job, this policy can help pay your medical expenses and provide part of the wages you lose while recovering.

Your personal health insurance provider might deny a claim if your injury is related to your work, which would leave you paying these bills on your own.

Whether or not you’re able to get workers’ compensation depends on the type of business and the ownership structure. Regardless, if you’re self-employed, it’s a good idea to check with the California Department of Industrial Relations to determine what your rights and liabilities are so that you can be sure that you’re properly insured.

How many hours an employee works does not affect their entitlement to workers’ compensation. It’s possible to get an independent contractor workers’ compensation waiver, but California law presumes anyone who works for an employer to be an employee.

If a claim is filed, the burden is on the employer to prove that someone is an independent contractor and not an employee.

To save money on workers' comp, it's important to make sure you classify your employees correctly. Employees with desk jobs or other jobs with a low risk of injury cost less to insure. This also helps you avoid misclassification fines.

In some cases, small business owners can choose to buy pay-as-you-go workers' compensation. This type of workers' comp policy has a low upfront premium, and lets you make payments based on your actual payroll instead of estimated payroll. It's useful for businesses that hire seasonal help or have fluctuating numbers of employees.

Finally, a documented safety program can help lower workers' comp costs. A safer workplace means fewer accidents, which helps keep your premium low.

Employers and employees are both protected by workers’ compensation settlements. California has created laws to streamline the process of making sure that an injured worker can quickly receive benefits, while the employer is protected from lengthy and expensive litigation and lost productivity.

Policies usually include employer's liability insurance, which can help cover legal expenses if an employee blames their employer for an injury. However, the exclusive remedy provision in most workers' comp policies prohibits an employee from suing their employer if they accept workers' comp benefits.

California law requires coverage to provide basic workers' compensation benefits for:

• Medical care
• Temporary disability benefits
• Permanent disability benefits
• Supplemental job displacement benefits
• Return-to-work supplement
• Death benefits

Often, the employer, employee, and workers’ comp insurer can reach an agreement without difficulty. However, the California Division of Workers' Compensation (DWC) Information and Assistance Unit can help settle disputes and guide the parties through litigation if an issue cannot be resolved any other way.

The California Department of Industrial Relations regulates workers’ comp insurance. California employers and workers can find resources for all aspects of workers’ compensation claims and laws through the agency’s Division of Workers’ Compensation.

Death benefits are an important component of workers’ compensation coverage in California. They provide:

• Reasonable burial expenses up to $10,000
• Death benefits will continue until the youngest minor dependent’s 18th birthday (disabled minors receive benefits for life) at the total temporary disability rate

Death benefits for dependents are determined by the number of dependents:

• One dependent: up to $250,000
• Two or more total dependents: up to $290,000
• Three or more total dependents: up to $320,000
• One total dependent, plus one or more partial dependents: $250,000 plus four times annual support for partial dependents (up to $290,000)
• One or more partial dependents: eight times annual support up to $250,000

There are two types of workers’ comp settlements in California:

Stipulated findings and award. This is when the injured worker and the insurance company agree on the extent of disability and benefits, resulting in biweekly payments unless there’s a financial need for benefits to be paid upfront. The insurance company would continue to pay for future medical treatment. The injured worker might be able to reopen a case if the medical condition becomes worse within five years.

Compromise and release. An injured worker is paid a lump sum that closes the case. Any future medical care would not be covered, even if it is related to the injury.

Any settlement would need to be approved by a California workers’ comp judge. There’s often an informal hearing before the judge. Although the insurance company would handle this, it’s good for the employer to remain informed about the ongoing progress of settlement negotiations in case it becomes the subject of later litigation.

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